Viacom CEO: ‘The Cloverfield Paradox’ Sale to Netflix a ‘One-Off’ Deal

Following an underperforming legacy film slate, Paramount Pictures jumped at the chance to offload sci-fi drama The Cloverfield Paradox to Netflix, according to Viacom CEO Bob Bakish.

The subscription streaming video behemoth — which reportedly paid $50 million for the rights — promptly streamed the third installment in the franchise (following 10 Cloverfield Lane in 2016) globally at the conclusion of Super Bowl LII — after paying millions more for a TV commercial aired during the game. A first for a major Hollywood movie.

During the Feb. 8 fiscal call, Bakish described the arrangement —that bypassed theatrical distribution — as “bit of a one-off” deal.

“This was a unique situation that we thought was the right fit for the franchise,” Bakish told analysts. “It allowed us to take advantage of an attractive audience and really create some pretty compelling economics.”

With the domestic launch of the Paramount Network the lone positive for the studio (narrowing operating loss 28% was another) in Q1, the studio has its sights on upcoming tentpole releases Mission: Impossible — FalloutTop Gun: MaverickWorld War Z 2, branded films from Paramount Players (What Men Want, Dora the Explorer) and Paramount Animation (SpongeBob The Movie), and Sega’s Sonic the Hedgehog.

Cloverfield Paradox, which received poor reviews and was slated for April release, apparently didn’t make the cut.

“We’re going to continue to focus the vast majority of our releases on traditional theaters, and we see a great opportunity there to take share driven by our ’19 slate and beyond,” Bakish said. “But, given our production capabilities and the landscape, we’re going to continue to look broadly and creatively for opportunities to create additional value for Paramount.”

 

Paramount Home Media Distribution Q1 Revenue Falls

Paramount Pictures Home Media Distribution Feb. 8 reported first-quarter (ended Dec. 31, 2017) revenue of $183 million, which was down almost 25% from revenue of $243 million during the previous-year period.

The home entertainment studio attributed the decline to the comparison against the release of Star Trek Beyond in the prior year quarter. Domestic home entertainment revenue decreased 38%, while international revenue increased 1%.

Star Trek Beyond generated $32.8 million in revenue from sales of 1.87 million combined DVD/Blu-ray Disc units, according to The-Numbers.com. The results do not include 4K UHD Blu-ray and digital retail.

The results followed a fiscal year that saw the studio up revenue 8% to $849 million from $783 million in 2016.

Overall, Paramount reported an operating loss of $130 million, which was a 28% “improvement” from an operating loss of $180 million in the previous-year period.

The studio saw a 28% decline in total revenue to $544 million from $758 million last year. Domestic revenue fell 42% to $270 million, with international sales down 6% to $274 million.

Notably, the venerable brand generated just $100 million in theatrical revenue, down 48% from $192 million last year. Content licensing declined almost 14% to $213 million from $245 million.

Lone highlight – domestic launch in January of Paramount Network featuring original series, including “Waco,” “Heathers,” “American Woman” and “Yellowstone”; “Lip Sync Battle,” “Ink Master” and “Bar Rescue”; all-new “Bellator” events and a broad portfolio of films.

“The turnaround at Paramount Pictures is in sight,” CEO Bob Bakish said on the fiscal call.

Viacom Inks Streaming Deal with Spain’s Telefónica — in Latin America

Media giant Viacom Feb. 5 announced a subscription streaming agreement with Spanish telecom Telefónica for Latin America.

The global deal represents a first for Viacom with a mobile carrier to carry all its international TV channels, as well as mobile streaming apps and VOD content.

Under the terms of the deal, video streams from Viacom subsidiaries MTV, Nickelodeon, Nick Jr., Comedy Central and Paramount will be available in the second half of the year on Movistar Play.

In addition, Viacom apps MTV Play, Nickelodeon Play, Comedy Central Play and Noggin will be available, with a range of content from the company’s brands that will be accessible on-demand.

The over-the-top agreement supplements an existing carriage deal for Viacom’s linear channels and VOD content already available on Telefónica’s pay TV services throughout the region.

“Mobile streaming is growing in popularity across Latin America – to stay in touch with our young audiences we need our brands and content to be everywhere they are,” Rita Herring, SVP, content distribution, Viacom’s Americas division, said in a statement.

 

CBS Forms Viacom Merger Special Committee

CBS Feb. 1 announced that its board has established a special committee of independent directors to evaluate a potential merger with Viacom, which includes Paramount Pictures.

CBS said that despite forming a special committee there is no assurance that it would result in a transaction or on what terms any transaction might occur.

CBS and Viacom were previously legally together until 2006, when Sumner Redstone, founder and controlling shareholder of Viacom, declared that diversified media conglomerates were dinosaurs due to changing market conditions.

Fast-forward to the present and 94-year-old Redstone is still around – with an apparent polar opposite mindset.

His daughter, Shari Redstone, vice chairman of Viacom, is driving reconnecting with CBS, which is headed by Les Moonves. The rationale being that diversified consolidation is mandatory in an increasingly fragmented direct-to-consumer market.

CBS and Viacom are following M&A leads taken by AT&T and Time Warner, and Walt Disney and 20th Century Fox.

 

 

Lionsgate Stock Jumps on Acquisition Scuttlebutt

Lionsgate’s stock took a mid-morning bounce Jan. 18 following media reports the studio/distributor is in the M&A crosshairs of media giants Amazon, Verizon, CBS and Viacom.

Shares increased 5% the day after a Deadline.com report – citing sources familiar with the situation – said the Santa Monica, Calif.-based company was in active merger discussions. Lionsgate shares have increased 20% in value since last November.

Lionsgate, which is headed by CEO Jon Feltheimer, has a box office hit in Wonder, which has generated $120 million at the box office since Thanksgiving. The studio ranks fourth in nascent domestic box office.

With Disney’s pending $52.4 billion acquisition of 20th Century Fox, consolidation within the media industry has renewed interest as online powers Netflix and Amazon expand their entertainment prowess globally.

Lionsgate, which has a robust home entertainment business, in addition to multiple digital ventures, is also a major producer of television content. The company’s $4.4 billion purchase of Starz in 2016 underscoring further its presence in premium television.

The company has also expressed interest in ancillary revenue streams, including a theme park in South Korea and live theatrical productions – ventures that require significant capital investment.

Last August, Reuters reported merger negotiations between Lionsgate and Hasbro ended following an impasse on the price.

Michael Burns, vice chairman of Lionsgate, last month told CNBC the Disney/Fox pact was good news since it eliminates one competitor from the market, while further validating the value of content.

“I think Lionsgate actually thrives in chaos. You’re in a place right now where you are going to see serious consolidation out there,” Burns said.

Lionsgate reports third quarter results Feb. 8.